Have you recently filed your taxes and received a large bill from the IRS? Well, you are not alone. Whether it was an unexpected increase in business income, real estate commissions, or large capital gains income, there are millions of taxpayers who owe back taxes to the IRS. Once you find yourself in this position, the next step is to decide what to do. Some taxpayers end up owing over $10K in back taxes and might even have unfiled tax returns. If that is your case, then you have some options.
However, these options are not always clear, which is why obtaining representation to help resolve your IRS back tax matters makes sense. When we represent a client, we dive deep into their financial situation to determine which specific program they would qualify for and how they can legally pay the least amount of taxes, penalties, and interest.
The more we are aware of a taxpayer’s financial situation, the better arrangement we can negotiate for them. Some taxpayers think that by saving on professional tax service fees, they are doing themselves a favor, but they don’t realize they could end up paying the IRS thousands (sometimes tens of thousands more) because of the arrangement they negotiated themselves, whether it was an Installment Agreement or a settlement known as the Offer in Compromise (OIC).
The Offer in Compromise program is offered by the IRS to give taxpayers a fresh start. Getting a settlement for less than you owe is great, but did you know that just the instructions for Form 656, Offer in Compromise, are 32 pages long? Then there are options for a 5-month lump sum cash offer or a deferred 12-month offer. How do you know which option works better for you? What about the 20% down payment that is required to be submitted with an Offer in Compromise? Can it be waived, and will your deposit be forfeited if your offer is denied?
The Offer in Compromise program is complex, especially if you are a small business owner, as there may be additional forms and information necessary to complete. In our next blog article, we will focus more on the IRS Offer in Compromise (OIC) program and provide more details. If you owe more than $10K in back taxes to the IRS or state, contact us today for a free and confidential consultation.